A Portfolio Has 45% of Its Value in IBM Shares

question 10

Multiple Choice

A portfolio has 45% of its value in IBM shares and the rest in Microsoft (MSFT) . The volatility of IBM and MSFT are 33% and 35%, respectively, and the correlation between IBM and MSFT is 0. What is the standard deviation of the portfolio?

• A) 19.45%
• B) 27.96%
• C) 34.04%
• D) 24.31%

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Definitions:

Unexpectedly High Earning

Financial results that surpass analysts' earnings predictions significantly, often leading to increased stock prices.

High Dividend Payout

A situation where a company pays a large portion of its earnings to shareholders in the form of dividends.

Marginal Tax Rates

The rate at which your last dollar of income is taxed, representing the tax bracket your top income falls into.

Capital Gains

are the increase in value of an investment or real estate, realized when the asset is sold for more than its purchase price.